U.S. Dollar Index Surges 1.43 Percent Amid Middle East Tensions
The dollar's advance was underpinned by a sharp rise in oil prices following coordinated US-Israeli strikes on Iran and Tehran's subsequent retaliatory campaign. The conflict deepened anxieties over global energy supply security, stoked inflation fears, and drove investors toward the relative safety of dollar-denominated assets.
The US Dollar Index closed the quarter at 99.7, having briefly breached the psychologically significant 100 threshold — a level not crossed since November 25, 2025. Across major currency pairs, the dollar's strength was broad-based: the euro retreated 1.7% to 1.1554 against the greenback, the Swiss franc shed 0.8% to 0.799, and the Japanese yen weakened 1.2% to 158.8.
At their respective lows, the euro slid to 1.1411 — its weakest reading since August 2025 — while the dollar climbed above 160 yen for the first time since July 2024.
With energy costs keeping upward pressure on prices globally, markets have recalibrated their expectations, increasingly anticipating that central banks will hold firm on restrictive policy rather than pivot toward easing in the near term.
Jane Foley, senior foreign exchange strategist at Rabobank, noted that in periods of acute uncertainty, investors consistently favor liquidity over yield — a dynamic that structurally reinforces the dollar's safe-haven appeal.
Foley explained that the currency's dominance in global trade and payment infrastructure means demand for it spikes rapidly during crises. She also pointed to lingering hesitancy among investors to build long-term dollar positions following the currency's steep selloff in April 2025, suggesting that cautious re-engagement contributed to the renewed momentum.
The strategist added that recent events had gone some way toward dispelling concerns — at least in the short term — that the dollar may have forfeited its safe-haven credentials. Should tensions in the Middle East intensify further, Foley indicated the dollar would likely find continued support.
Despite the quarterly rebound, the broader picture remains sobering for dollar bulls: the US Dollar Index has still shed 9.4% across 2025 as a whole, marking its steepest annual decline since 2017.
Legal Disclaimer:
EIN Presswire provides this news content "as is" without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the author above.
